Island Air is still enduring growing pains as it awaits for the arrival later this year of two 71-seat Q400 NextGen turboprops that would represent the largest planes in its fleet.
The Honolulu-based small regional carrier lost $3.3 million in the January-March period to mark its fourth straight losing quarter under new billionaire owner Larry Ellison, according to data released Monday by the U.S. Department of Transportation.
Although revenue rose 29.3 percent to $7.5 million from $5.8 million in the year-earlier quarter, operating expenses increased 43 percent to $10.8 million from $7.5 million.
Chief Executive Officer Paul Casey, hired in May 2013, declined to comment about Island Air’s financials because the company is privately owned. Island Air is required to report its financial data to the DOT.
Island Air had a $5.6 million profit in its initial quarter under Ellison’s ownership, but the net income was inflated by $7.4 million in nonoperating income that Casey has declined to explain. The airline subsequently lost $1.8 million, $1.9 million and $4.9 million, respectively, in the following three quarters.
Local aviation historian Peter Forman said Island Air needs some time to turn around its operations, which last month Casey referred to as "essentially a startup" when he took over.
"Island Air is working very hard on improving the quality of its product, and they’ve made tremendous headway there, but there is a delay between the time you improve your product and the response by the traveling public," Forman said. "I would expect their revenue would be improving in the future, which will affect their bottom line."
The airline launched several new initiatives under Casey during his first year at the helm. They include a new guest services department and upgrades to Honolulu’s commuter terminal that include modern check-in counters.
The carrier, which operates more than 250 weekly flights between Oahu, Maui, Kauai and Lanai, last week announced it was adding three seasonal round-trip flights between Honolulu and Kahului and an additional round-trip flight between Honolulu and Lihue on Thursdays through Saturdays until Aug. 17.
Forman said the primary reason for Island Air’s higher expenses last quarter were the larger airplanes that the company has been flying. In the year-earlier quarter, Island Air was phasing out its 37-seat Bombardier de Havilland Dash-8 aircraft in favor of the 64-seat ATR-72 turboprops it began flying in February 2013.
"The solution (for Island Air becoming profitable) will be on the revenue side and whether it attracts enough passengers to fill those seats better in the future," Forman said. "I remain optimistic about the long-term prospects for Island Air. The disappearance of go! (on March 31 after eight years in Hawaii) will help Island Air’s numbers in the future."
